Monzo is raising new cash from investors at an almost 40 per cent discount to its previous fundraising. The digital bank is close to a deal that would value it around £1.25bn, compared to a £2bn valuation last June. The pandemic is posing a serious challenge to unlisted tech companies as VCs become more cautious with their money.
Wow, that’s a big discount!
the pandemic is posing a serious challenge to many more companies than just fintechs … to raise £80m from anybody in these times is pretty good going
8 Likes
Yeah I totally agree. My company is backed by the same VC as N26 and we we’re basically told to find another way to survive.
2 Likes
very fair point
1 Like
They should have given the Crowd a chance to Top up at this valuation.
6 Likes
Nothing to say that they aren’t going to do this yet?
they usually communicate on them at the same time.
Usually they’d say we are allowing the crowd to invest alongside VC.
Indeed but this news isn’t from Monzo but a leak via the FT.
If this story is accurate (quite a large if) I suspect we’ll look back and celebrate it as a fantastic result in a few months time.
1 Like
Maybe someone from Monzo should fill us in on what’s going on, under the certain circumstances everyone will understand etc.
1 Like
unlikely to get any confirmation , denial , or details from anybody at Monzo until everything is signed sealed and delivered
3 Likes
Probably not the best of time also to be going and asking the british public to invest further in the company also considering the shares mean absolutely nothing until/if the company floats. In a recession, furloughing their staff etc… the negative headlines write themselves…
2 Likes
Where is Tom?! He is so quiet…
1 Like
Let’s see what happens Monzo is still signing up customers 
1 Like
40% down on a year ago is quite shocking even in these strange times (in comparison to N26 at ~£3bn the other week and all the listed Fintechs around the world currently trading close to all time highs, it doesn’t feel right to be comparing Monzo against NatWest etc who are ~40% down due to no more fat profits and the impact of a recession on their huge loan books).
It feels like whoever is investing in this round could be getting the deal of a lifetime here. I would certainly have been a buyer if the crowd was asked, but sadly that is probably never going to happen due to the extra time and planning required, legal complexity (prospectus etc), EU rules on crowdfunding limits, and general high cost of it. Much easer to tap up their mates on this occasion so I don’t hold any grudges there.
On the plus side Monzo have only diluted 5% and secured at least a year of financial security, so it is a rather superficial down round and the scars will not be very deep in terms of long term value. Hopefully they will bounce back in the next round, if there ever is one (any other eternal optimists out there?).
They did this in 2016 as well - got caught out with not enough capital (due to ‘unexpected growth’) and did an emergency round with Passion Capital to balance the books at what felt like a very cheap price (whilst not a down round, it felt way underpriced). They have more than ten bagged since then so I certainly wouldn’t write them off from continuing the upwards trajectory after swallowing this medicine.
The user comments after the FT article are quite sobering (if anyone wants to.know what people who don’t use Monzo think about them. Disclaimer: it’s brutal).
5 Likes
I feel like there are a few things why the new round is a downround, hint: its not only due to the Corona Virus. Monzo is still growing at a phenomenal rate, but it could be doing way way way better!
- Lack of updates in 2020, we’re almost half way through the year and what major news have we seen besides the US banking license application? In the previous years we used to receive positive interesting news every other week - there was relentless innovation and growth. Yes the Corona Virus has impacted some of the operations but why has Revolut kept innovating and launching new things and pushing out updates, if they can surely Monzo can?
- Closing of (legit) customer accounts (and all the negative PR that comes with it). No matter what Monzo says publicly, it is for sure closing the most customer accounts our of any UK bank in % terms. There are FB groups about it, loads of forums, reviews, etc. Why there are no such things for other banks neither challengers nor incumbents, yes some of them close some accounts too, but not at such a scale. It feels like Monzo will close any account that it thinks could be suspicious without any research into what actually happens inside. What I think they should do is they should give notice and allow the person to stop doing what Monzo doesn’t like first and then monitor that account, if it continues only then close it as opposed to close any accounts that are even tiny bit of suspiciuos in Monzo’s eyes straightaway without any research.
- Slowing customers number growth - see above, its party due to high number of closed accounts and lots and lots of negative PR around that - this is still ongoing and accelerating. I know real legit people who left Monzo for other banks to not have to deal with a potential of having an account closed for any reason in the future. If Monzo was careful with their approach and really only closed the accounts that were involved in some wrong doing they would have 2-3x more customers signing up every month even throughout Corona Virus times. This would help with valuation for sure!
- US launch and updates: really exciting topic and almost no news and no updates. If Monzo want to create the same vibe and success as they did over here in the UK, they need to put more effort into the community building both offline and online, videos, interviews, giving out cards at university campuses, etc - they need to act as a startup not a subsidiary of a large faceless conglomerate. Kinda seems like the US team is a bit sleepy as compared to the UK team. Their Twitter account is sort of the main place where updates/developments could be found, but yet its almost not used - 1 tweet per week for real?
If Monzo wants to compete on a global scale and become the size of PayPal it needs to continue to push forward, roll the sleeves and work hard, it kinda seems like they’ve felt asleep in the last 6 months. Whilst Revolut has continued to develop like a small startup and they’re now reaping the rewards - Revolut seems to have a chance to become the size PayPal and hopefully a better version of it.
I think the above points are why this round is a downround, not only the Corona Virus. Any comments?
4 Likes
Growth was at a pretty constant level from the end of the ad campaign last summer until the corona lockdown. You can see on the graph the reduction in numbers after the ads finished and then the increase in the winter which was sustained
Rev has a huge funding round just before the virus and so haven’t had to furlough any staff
1 Like
I’d sure like to see the evidence that supports that claim.
Ah yes, the much fêted Facebook groups, bastions of upstanding former Monzo customers.
Yes, they probably have a video chat every Wednesday and have a virtual raffle to pick out the ones they don’t like. Not down to actual investigation or anything, it’s all random and without any merit.
Dear Mr Smith,
We’ve noticed you’ve been using your account for fraud. Would you mind stopping, please? If you don’t we might have to send a second letter.
Yours sincerely
Monzo
15 Likes